Paytm shares surged nearly 3% in Thursday’s trade, hitting a fresh 52-week high of Rs 942.5, after global brokerage firm UBS maintained a ‘neutral’ stance on the fintech company and raised its target price to Rs 1,000 from Rs 490.
The brokerage noted that significant improvements have already been priced in and suggested that the next phase of business growth should be driven by revenue, as most of the cost optimisation has already happened.
UBS expects Paytm’s revenue for FY26 to remain at similar levels as FY24. Adjusted EBITDA break-even is likely to be achieved by the fourth quarter of FY25. Additionally, the stock’s rating has been changed to bullish, and regulatory issues are now resolved.
Last week, global brokerage firm Bernstein reaffirmed its bullish stance on Paytm, and raised the target price for the fintech giant to Rs 1,000 per share from Rs 750.
Retaining the ‘outperform’ rating, Bernstein noted that the discussion around Paytm has shifted from survival concerns to a focused analysis of both bull and bear case scenarios.
In the bull case, Bernstein expects Paytm to benefit partially from lending off its balance sheet, as well as improving payment margins. This could lead to a ~100% increase in its base case earnings per share (EPS) estimates. However, in the bear case, Bernstein thinks payment margins are coming under pressure, and loan disbursement growth could slow, resulting in a 40% drop in their base case EPS estimates.
Meanwhile, earlier this week, the digital payments service provider announced the launch of an automatic top-up feature for its UPI Lite service that will enable PIN-less transactions for payments below Rs 500. This new feature, which is currently available to select Yes Bank and Axis Bank users, automatically recharges the UPI Lite balance when it falls below a pre-determined threshold.
